A few days ago, the US dollar developed a steady rally. The greenback received a boost from the minutes of the US Fed’s policy meeting. The contents lacked definite details. The big question hanging over investors is whether the Fed is going to raise rates three or four times in 2018. Though the policymakers did not shed light on their agenda, the market drew some conclusions.
Following the release of the minutes, the US dollar advanced across the board and yields of 10-year Treasuries hit a fresh four-year high. Amid the greenback’s rally, traders were cementing expectations for several rate hikes. Meanwhile, traders are betting on 2.82 rate hikes this year. The Fed officials agree that it would be wise to take an approach of gradual monetary tightening. Besides, they confirm that changes in monetary policy will depend on how further prospects and risks for the economy will differ from economic projections of the Federal Open Market Committee. However, the joy of investors was short-lived. The US dollar sank, following yields of the benchmark Treasuries because traders are alert to a testimony of the new Fed’s leader.
Meanwhile, the market has come to a standstill as Jerome Powell is to testify for the first time before Congress as the new Fed’s Chair. It is still unclear what exactly the Fed’s leader is going to tell the lawmakers on Capitol Hill. Investors will be looking for clues as to how many times the US regulator intends to increase rates this year. One thing is certain. His speech is sure to determine the market sentiment on the US dollar for the short term.
